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Digital Brands Group Reports Second Quarter 2024 Financial Results

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Digital Brands Group (NASDAQ: DBGI) reported Q2 2024 financial results, highlighting debt reduction and cost-cutting measures. The company paid off over $5.0 million in debt and reduced G&A expenses by $4.5 million in the first half of 2024. Net revenues were $3.4 million, down from $4.5 million a year ago, impacted by paused digital advertising. Gross profit margins decreased to 45.9% from 52.0%. The company reported a net loss of $3.5 million, or $2.08 per diluted share. CEO Hil Davis expressed optimism about future growth potential, citing recent digital advertising efforts yielding a 2.6x to 2.9x ROAS.

Digital Brands Group (NASDAQ: DBGI) ha riportato i risultati finanziari del secondo trimestre del 2024, evidenziando la riduzione del debito e misure di razionalizzazione dei costi. L'azienda ha estinto oltre 5,0 milioni di dollari di debito e ha ridotto le spese generali e amministrative di 4,5 milioni di dollari nella prima metà del 2024. I ricavi netti sono stati di 3,4 milioni di dollari, in calo rispetto ai 4,5 milioni dell'anno precedente, influenzati dalla fermata della pubblicità digitale. I margini di profitto lordo sono diminuiti al 45,9% rispetto al 52,0%. L'azienda ha riportato una perdita netta di 3,5 milioni di dollari, pari a 2,08 dollari per azione diluita. Il CEO Hil Davis ha espresso ottimismo riguardo al potenziale di crescita futura, citando i recenti sforzi nella pubblicità digitale che hanno generato un ROAS da 2,6x a 2,9x.

Digital Brands Group (NASDAQ: DBGI) presentó los resultados financieros del segundo trimestre de 2024, destacando la reducción de la deuda y las medidas de reducción de costos. La compañía pagó más de 5,0 millones de dólares en deuda y redujo los gastos generales y administrativos en 4,5 millones de dólares en la primera mitad de 2024. Los ingresos netos fueron de 3,4 millones de dólares, una disminución desde los 4,5 millones del año anterior, afectada por la pausa en la publicidad digital. Los márgenes de ganancia bruta disminuyeron al 45,9% desde el 52,0%. La compañía reportó una pérdida neta de 3,5 millones de dólares, o 2,08 dólares por acción diluida. El CEO Hil Davis expresó optimismo sobre el potencial de crecimiento futuro, citando los recientes esfuerzos en publicidad digital que generaron un ROAS de entre 2,6x y 2,9x.

디지털 브랜드 그룹 (NASDAQ: DBGI)는 2024년 2분기 재무 결과를 발표하며 부채 감소와 비용 절감 조치를 강조했습니다. 이 회사는 500만 달러 이상의 부채를 갚았고, 2024년 상반기 동안 일반 관리 비용을 450만 달러 줄였습니다. 순수익은 340만 달러로, 작년의 450만 달러에서 감소했으며, 디지털 광고 중단의 영향을 받았습니다. 총 이익률은 52.0%에서 45.9%로 감소했습니다. 이 회사는 350만 달러의 순손실을 보고했으며, 이는 희석 주당 2.08달러에 해당합니다. CEO 힐 데이비스는 최근 디지털 광고 노력이 2.6배에서 2.9배의 ROAS를 달성했다고 언급하며 미래 성장 가능성에 대한 낙관적인 견해를 밝혔습니다.

Digital Brands Group (NASDAQ: DBGI) a publié les résultats financiers du deuxième trimestre 2024, soulignant la réduction de la dette et les mesures de réduction des coûts. L'entreprise a remboursé plus de 5,0 millions de dollars de dettes et a réduit les dépenses générales et administratives de 4,5 millions de dollars au cours de la première moitié de 2024. Les revenus nets se sont élevés à 3,4 millions de dollars, en baisse par rapport à 4,5 millions de dollars l'année précédente, impactés par une pause dans la publicité numérique. Les marges de profit brut ont diminué à 45,9% contre 52,0%. L'entreprise a enregistré une perte nette de 3,5 millions de dollars, soit 2,08 dollars par action diluée. Le PDG Hil Davis a exprimé de l'optimisme quant au potentiel de croissance futur, citant les récents efforts de publicité numérique ayant généré un ROAS de 2,6x à 2,9x.

Digital Brands Group (NASDAQ: DBGI) hat die Finanzzahlen für das zweite Quartal 2024 veröffentlicht und dabei die Reduzierung der Schulden und Maßnahmen zur Kostensenkung hervorgehoben. Das Unternehmen hat über 5,0 Millionen US-Dollar an Schulden beglichen und die allgemeinen Verwaltungskosten im ersten Halbjahr 2024 um 4,5 Millionen US-Dollar gesenkt. Die Nettoumsätze betrugen 3,4 Millionen US-Dollar, ein Rückgang von 4,5 Millionen US-Dollar im Vorjahr, was durch pausierte digitale Werbung beeinflusst wurde. Die Bruttogewinnmarge sank von 52,0% auf 45,9%. Das Unternehmen meldete einen Nettoverlust von 3,5 Millionen US-Dollar, oder 2,08 US-Dollar pro verwässerte Aktie. CEO Hil Davis äußerte Optimismus hinsichtlich des zukünftigen Wachstumspotenzials und verwies auf die jüngsten Bemühungen im Bereich digitale Werbung, die eine ROAS von 2,6x bis 2,9x erbrachten.

Positive
  • Paid off over $5.0 million in debt and other liabilities
  • Reduced G&A expenses by $4.5 million
  • G&A expenses decreased $1.1 million to $2.9 million compared to $4.1 million a year ago
  • Sales and marketing expenses ratio improved to 18.1% from 24.4% a year ago
  • Net loss reduced to $3.5 million from $5.7 million a year ago (excluding one-time benefit)
  • Recent digital advertising efforts yielding 2.6x to 2.9x ROAS
Negative
  • Net revenues decreased to $3.4 million from $4.5 million a year ago
  • Gross profit margins declined to 45.9% from 52.0% a year ago
  • Gross profit decreased to $1.6 million from $2.3 million a year ago
  • Net loss of $3.5 million reported for Q2 2024

Insights

Digital Brands Group's Q2 2024 results reveal a mixed financial picture. The company's focus on debt reduction, paying off over $5 million in liabilities, is a positive step towards financial health. However, this came at the cost of revenue, which declined by 24.4% to $3.4 million. The lack of digital advertising spend significantly impacted e-commerce revenue, a concerning trend in today's digital-first retail landscape.

The reduction in G&A expenses by $1.1 million is commendable, but the 6.1% drop in gross profit margins to 45.9% is worrying. The net loss narrowed to $3.5 million, an improvement from the previous year, but still substantial relative to revenue. The recent reintroduction of digital advertising with a 2.6x to 2.9x ROAS is promising, but its sustainability and impact on profitability remain to be seen.

DBG's strategy shift towards financial restructuring over growth is evident in their Q2 results. The decision to prioritize debt reduction over digital advertising spend is a double-edged sword. While it improves the balance sheet, it has led to a significant revenue decline, particularly in e-commerce - a important channel for luxury lifestyle brands.

The company's belief in a future improved consumer environment is optimistic, but not guaranteed. The recent reactivation of digital advertising with a positive ROAS is encouraging, but it's too early to determine if this will translate into sustainable growth. The reduced operating expenses provide a leaner cost structure, which could position DBG well if consumer spending rebounds. However, in the competitive luxury lifestyle sector, maintaining brand visibility is important and the lack of advertising spend could have long-term negative impacts on brand equity and market share.

DBG's Q2 results highlight the critical role of digital advertising in e-commerce success. The company's decision to halt digital ad spend led to a significant drop in online sales, underscoring the direct correlation between digital marketing and revenue in the e-commerce space. This move, while beneficial for short-term debt reduction, could potentially harm long-term growth and customer acquisition.

The recent reactivation of digital advertising with a 2.6x to 2.9x ROAS is promising, showcasing the effectiveness of their digital strategies when properly funded. However, in the fast-evolving digital landscape, consistency in online presence is key. The pause in advertising may have allowed competitors to gain ground, potentially making future customer acquisition more costly. As DBG aims to leverage its digital-first brands, maintaining a strong, consistent online presence will be important for future success in the competitive luxury lifestyle market.

Austin, TX, Aug. 19, 2024 (GLOBE NEWSWIRE) -- Digital Brands Group, Inc. (“DBG”) (NASDAQ: DBGI), a curated collection of luxury lifestyle, digital-first brands, today reported financial results for its second quarter ended June 30, 2024.

“The company paid off over $5.0 million in debt and other liabilities during the first half of this year. The Company also lowered its G&A expenses by $4.5 million during the same period. Based on conversations with strategic partners, we believe cleaning up the balance sheet creates more interest, especially coupled with significantly lower operating expenses,” said Hil Davis, CEO of Digital Brands Group.

Davis continued, “We believe the softer consumer environment will improve. At that time, we believe the Company will be in a much better position to leverage any growth spend, especially given the lower operating expenses and significantly lower interest expense. To that point, we have recently turned back on digital advertising and are experiencing a 2.6x to 2.9x ROAS.”

Results for the First Quarter

  • Net revenues were $3.4 million compared to $4.5 million a year ago
    • Net revenues were negatively impacted by no digital advertising spend, which resulted in limited e-commerce revenue
    • The Company prioritized paying off over $5.0 million in debt and other liabilities during the first half of 2024
  • Gross profit margins were 45.9% compared to 52.0% a year ago
    • Gross profit margins were negatively impacted by lower digital revenue associated with no digital advertising revenue in the quarter
    • Gross profit was $1.6 million compared to $2.3 million a year ago
  • G&A expenses decreased $1.1 million to $2.9 million compared to $4.1 million a year ago
    • G&A included $1.8 million in non-cash expenses primarily associated with D&A
  • Sales & Marketing expenses were $615,000 compared to $1.1 million a year ago
    • Sales and marketing expenses ratio was 18.1% compared to 24.4% a year ago
    • As noted above, the Company dd not spend any capital on digital advertising
  • Net loss was $3.5 million compared to a net loss of $5.7 million a year ago, which excludes a one-time non-cash benefit of $10.7 million a year ago
    • Including this benefit, net income was $5.0 million a year ago
  • Net loss per diluted share was $2.08 per diluted share compared to a net income per diluted share of $0.31 a year ago, which included the $10.7 million benefit a year ago

Conference Call and Webcast Details Updated

Management will host a conference call on Monday, August 19, 2024 at 5:00 p.m. ET to discuss the results. The live conference call can be accessed by dialing 888-506-0062 from the U.S. or internationally. The conference I.D. code is 393166 or referencing Digital Brands or via the web by using the following link: https://www.webcaster4.com/Webcast/Page/3044/51112

Forward-looking Statements

Certain statements included in this release are "forward-looking statements" within the meaning of the federal securities laws. Forward-looking statements are made based on our expectations and beliefs concerning future events impacting DBG and therefore involve several risks and uncertainties. You can identify these statements by the fact that they use words such as “will,” “anticipate,” “estimate,” “expect,” “should,” and “may” and other words and terms of similar meaning or use of future dates, however, the absence of these words or similar expressions does not mean that a statement is not forward-looking. All statements regarding DBG’s plans, objectives, projections and expectations relating to DBG’s operations or financial performance, and assumptions related thereto are forward-looking statements. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. DBG undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Potential risks and uncertainties that could cause the actual results of operations or financial condition of DBG to differ materially from those expressed or implied by forward-looking statements include, but are not limited to: risks arising from the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the coronavirus (COVID-19) global pandemic; the level of consumer demand for apparel and accessories; disruption to DBGs distribution system; the financial strength of DBG’s customers; fluctuations in the price, availability and quality of raw materials and contracted products; disruption and volatility in the global capital and credit markets; DBG’s response to changing fashion trends, evolving consumer preferences and changing patterns of consumer behavior; intense competition from online retailers; manufacturing and product innovation; increasing pressure on margins; DBG’s ability to implement its business strategy; DBG’s ability to grow its wholesale and direct-to-consumer businesses; retail industry changes and challenges; DBG’s and its vendors’ ability to maintain the strength and security of information technology systems; the risk that DBG’s facilities and systems and those of our third-party service providers may be vulnerable to and unable to anticipate or detect data security breaches and data or financial loss; DBG’s ability to properly collect, use, manage and secure consumer and employee data; stability of DBG’s manufacturing facilities and foreign suppliers; continued use by DBG’s suppliers of ethical business practices; DBG’s ability to accurately forecast demand for products; continuity of members of DBG’s management; DBG’s ability to protect trademarks and other intellectual property rights; possible goodwill and other asset impairment; DBG’s ability to execute and integrate acquisitions; changes in tax laws and liabilities; legal, regulatory, political and economic risks; adverse or unexpected weather conditions; DBG's indebtedness and its ability to obtain financing on favorable terms, if needed, could prevent DBG from fulfilling its financial obligations; and climate change and increased focus on sustainability issues. More information on potential factors that could affect DBG’s financial results is included from time to time in DBG’s public reports filed with the SEC, including DBG’s Annual Report on Form 10-K, and Quarterly Reports on Form 10-Q, and Forms 8-K filed or furnished with the SEC.

DIGITAL BRANDS GROUP, INC
STATEMENT OF OPERATIONS

  Three Months Ended  Six Month Ended 
  June, 30  June, 30 
  2024  2023  2024  2023 
Net revenues $3,396,069  $4,493,424   6,972,656  $8,869,803 
Cost of net revenues  1,837,392   2,157,349   3,693,243   4,540,488 
Gross profit  1,558,677   2,336,075   3,279,413   4,329,315 
                 
Operating expenses:                
General and administrative  2,946,688   4,074,051   3,918,420   8,380,063 
Sales and marketing  615,190   1,097,326   1,323,340   2,036,677 
Distribution  299,034   242,214   564,533   512,399 
Change in fair value of contingent considerartion  -   (10,698,475)  -   (10,698,475)
Total operating expenses  3,860,912   (5,284,884)  5,806,293   230,664 
                 
Income (loss) from operations  (2,302,235)  7,620,959   (2,526,880)  4,098,651 
                 
Other income (expense):                
Interest expense  (1,239,624)  (1,086,888)  (1,744,615)  (2,951,487)
Other non-operating income (expenses)  31,379   2,240   77,280   (676,749)
Total other income (expense), net  (1,208,245)  (1,084,648)  (1,667,335)  (3,628,236)
                 
Income tax benefit (provision)  -   -   -   - 
Net income (loss) from continuing operations  (3,510,481)  6,536,311   (4,194,216)  470,415 
Income from discontinued operations, net of tax  -   (1,492,050)  -   (1,562,503)
Net income (loss) $(3,510,481) $5,044,261   (4,194,216) $(1,092,088)
                 
Weighted average common shares outstanding -                
Basic  1,684,801   6,170,227   1,703,645   5,920,596 
Dilluted  1,684,801   20,865,111   1,703,645   20,615,480 
Net loss per common share - basic $(2.08) $1.06  $(2.46) $0.08 
Net loss per common share -dilluted $(2.08) $0.31  $(2.46) $0.02 


The accompanying notes are an integral part of these financial statements.

DIGITAL BRANDS GROUP, INC
STATEMENTS OF CASH FLOW

  Six Months Ended 
  June 30, 
  2024  2023 
Cash flows from operating activities:        
Net loss $(4,194,216) $(1,092,088)
Adjustments to reconcile net loss to net cash used in operating activities:        
Depreciation and amortization  1,439,094   1,765,619 
Amortization of loan discount and fees  1,582,887   1,611,433 
Loss on extinguishment of debt  -   689,100 
Loss on dsisposition of bussiness  -   1,523,940 
Stock-based compensation  168,200   207,094 
Shares issued for services  224,265   499,338 
Change in credit reserve  (151,611)  344,140 
Change in fair value of contigent consideration  -   (10,698,475)
Discontinued operation  -   7,666 
Non-cash lease expense  530,312     
Changes in operating assets and liabilities:        
Accounts receivable, net  (210,819)  375,685 
Due from factor  (253,342)  (96,955)
Inventory  (211,846)  454,011 
Prepaid expenses and other current assets  (101,289)  (44,213)
Accounts payable  (1,419,297)  92,494 
Accrued expenses and other liabilities  -   1,346,068 
Deferred revenue  -   (183,782)
Accrued interest payable  196,601   217,479 
Due to RP  26,909     
Lease liabilities  (377,500)  - 
Net cash used in operating activities  (2,751,651)  (2,981,446)
Cash flows from investing activities:        
Cash disposed  -   (18,192)
Purchase of property, equipment and software  (23,800)  (27,855)
Deposits  (77,280)  87,378 
Net cash provided by (used in) investing activities  (101,080)  41,331 
Cash flows from financing activities:        
Repayments from related party advances      (57,427)
Advances from factor  -   154,073 
Issuance of loans and note payable  490,977   4,194,799 
Repayments of convertible notes and loan payable  (2,179,906)  (6,604,552)
Insurance for common stock for cash  4,613,681     
Issuance of common stock in public offering  -   5,000,003 
Offering costs  -   (686,927)
Net cash provided by financing activities  2,924,752   1,999,969 
Net change in cash and cash equivalents  72,021   (940,146)
Cash and cash equivalents at beginning of period  20,773   1,275,616 
Cash and cash equivalents at end of period $92,794  $335,470 


The accompanying notes are an integral part of these financial statements.

DIGITAL BRANDS GROUP, INC
STATEMENT OF BALANCE SHEETS

  June 30,  December 31, 
  2024  2023 
ASSETS        
Current assets:        
Cash and cash equivalents $92,794  $20,773 
Accounts receivable, net  285,652   74,833 
Due from factor, net  742,764   337,811 
Inventory  5,061,446   4,849,600 
Prepaid expenses and other current assets  377,959   276,670 
Total current assets  6,560,615   5,559,687 
Property, equipment and software, net  79,309   55,509 
Goodwill  8,973,501   8,973,501 
Intangible assets, net  8,543,123   9,982,217 
Deposits  152,711   75,431 
Right of use asset  633,755   689,688 
Total assets $24,943,014  $25,336,033 
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
Current liabilities:        
Accounts payable $6,119,604  $7,538,902 
Accrued expenses and other liabilities  4,957,132   4,758,492 
Due to related parties  426,921   400,012 
Convertible note payable, net  100,000   100,000 
Accrued interest payable  1,944,362   1,996,753 
Loan payable, current  2,110,188   2,325,842 
Promissory note payable, net  4,730,740   4,884,592 
Right of use liability, current portion  1,031,261   1,210,814 
Total current liabilities  21,420,208   23,215,407 
Loan payable  150,000   150,000 
Right of use liability, non current portion  276,432   - 
Deferred tax liability  368,034   368,034 
Total liabilities  22,214,674   23,733,441 
         
Commitments and contingencies        
         
Stockholders' equity:        
Undesignated preferred stock, $0.0001 par, 10,000,000 shares authorized, 0 shares issued and outstanding as of both June 30, 2024 and December 31, 2023      - 
Series A convertible preferred stock, $0.0001 par, 6,300 shares designated, 6,300 shares issued and outstanding as of both June 30, 2024 and December 31, 2023  1   1 
Series C convertible preferred stock, $0.0001 par, 1,744 and 4,786 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively  1   1 
Common stock, $0.0001 par, 1,000,000,000 shares authorized, 2,282,332 and 1,114,359 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively  226   110 
Additional paid-in capital  120,916,777   115,596,929 
Accumulated deficit  (118,188,665)  (113,994,449)
Total stockholders' equity  2,728,340   1,602,592 
Total liabilities and stockholders' equity $24,943,014  $25,336,033 


The accompanying notes are an integral part of these financial statements.

About Digital Brands Group

We offer a wide variety of apparel through numerous brands on a both direct-to-consumer and wholesale basis. We have created a business model derived from our founding as a digitally native-first vertical brand. We focus on owning the customer's "closet share" by leveraging their data and purchase history to create personalized targeted content and looks for that specific customer cohort.

Digital Brands Group, Inc. Company Contact
Hil Davis, CEO
Email: invest@digitalbrandsgroup.co
Phone: (800) 593-1047

SOURCE Digital Brands Group, Inc.

Related Links
https://www.digitalbrandsgroup.co
https://ir.digitalbrandsgroup.co


FAQ

What were Digital Brands Group's (DBGI) Q2 2024 net revenues?

Digital Brands Group reported net revenues of $3.4 million for Q2 2024, compared to $4.5 million in the same quarter a year ago.

How much debt did Digital Brands Group (DBGI) pay off in the first half of 2024?

Digital Brands Group paid off over $5.0 million in debt and other liabilities during the first half of 2024.

What was Digital Brands Group's (DBGI) gross profit margin in Q2 2024?

Digital Brands Group's gross profit margin was 45.9% in Q2 2024, compared to 52.0% in the same quarter a year ago.

How much did Digital Brands Group (DBGI) reduce its G&A expenses in the first half of 2024?

Digital Brands Group reduced its G&A expenses by $4.5 million during the first half of 2024.

What was Digital Brands Group's (DBGI) net loss per diluted share in Q2 2024?

Digital Brands Group reported a net loss of $2.08 per diluted share in Q2 2024.

Digital Brands Group, Inc.

NASDAQ:DBGI

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